Each bank in a city receives on deposit, daily, checks on other banks. Instead of sending these by messenger to the other banks they are sent to the clearing-house at a fixed hour each day - in some cities twice a day.

The banks of a clearing-house city are numbered. These numbers are seen stamped upon checks which the bank handles in the process of collection. Bank A may for instance carry checks amounting to $200,000 to the clearing-house for collection. Banks C, D, E and F may have checks on A amounting to $189,240, which they send to the clearing-house for collection. This would show a balance of $10,760 in A as favor, which is paid to bank A by the clearing-house in clearing-house certificates or due bills. If the balance were against A, the amount due would have to be made up within the hour limit fixed by the clearing-house regulations.

Suppose, for illustration, that Brown of Lynn owes Smith of Media $25, and pays the amount by a check on a Lynn bank. This check will go by mail from Lynn to Media. Smith will deposit it in a Media bank. The Media bank will send it with other checks to its Philadelphia correspondent,say the Penn National. The Penn National will send it with other checks to its New York correspondent,say the Chemical National. The Chemical will forward it with other checks to its Boston correspondent, say the First National. Now the First National of Boston may not be the Boston correspondent of the Lynn bank. It therefore sends the check for collection through the Boston clearing-house to the bank which does the Boston business for the particular Lynn bank upon which the check is drawn, say the Second National. The Second National sends the check to Lynn, where it is charged up against Brown's account. This system of collections is almost as perfect as is the post-office system of carrying registered mail.